July 14 (Reuters) - A U.S. appeals court panel appeared to agree with Uber Technologies Inc and Postmates Inc that California lacked a legitimate reason to make it difficult for certain app-based services to treat workers as independent contractors while exempting many similar businesses.
During oral arguments in San Francisco on Wednesday, a three-judge 9th U.S. Circuit Court of Appeals panel seemed open to reviving claims by Uber and Postmates that AB5, a 2019 state worker classification law, violates their constitutional right to equal protection.
AB5 imposes a higher bar to show that workers are independent contractors rather than employees, who have greater legal protections and are more costly for businesses. Gig companies rely heavily on services provided by independent contractors, who some studies show cost 30% less than employees.
State lawmakers exempted a long list of businesses from AB5, including "referral agencies" that connect workers and customers, but explicitly did not exempt app-based transportation and delivery services. That means Uber is subject to the law while pet-sitting service Wag, which has been called "Uber for dogs," is not.
The 9th Circuit judges repeatedly questioned state lawmakers' logic in carving out exemptions.
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